Homework: Cost-Volume-Profit Analysis Assignment
16
Part 2 of 2
3
points
Required information
[The following information applies to the questions displayed below.]
Astro Company sold 28,000 units of its only product and reported income of $161,000 for the current year. During a
planning session for next year's activities, the production manager notes that variable costs can be reduced 40% by
installing a machine that automates several operations. To obtain these savings, the company must increase its annual
fixed costs by $143,000. Total units sold and the selling price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($56 per unit)
Variable costs ($42 per unit)
Contribution margin
Fixed costs
Income
$ 1,568,000
1,176,000
392,000
231,000
$ 161,000
2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume
sales are $1,568,000. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Contribution margin